Ottawa, Canada, October 5, 2011 — DragonWave Inc. (TSX: DWI; NASDAQ: DRWI) a leading global supplier of packet microwave radio systems for mobile and access networks, today announced financial results for its second quarter of fiscal year 2012, ended August 31, 2011. All figures are reported in U.S. dollars and were prepared in accordance with U.S. generally accepted accounting principles.

Revenue for the second quarter of fiscal year 2012 was $13.6 million, compared with $27.2 million in the second quarter of fiscal year 2011 and $11.0 million in the first quarter of fiscal year 2012. Revenue from customers within North America was $11.8 million, compared with $20.3 million in the second quarter of the prior fiscal year. DragonWave had two customers who generated more than 10% of revenue in the second quarter of fiscal year 2012.

Gross margin for the second quarter of fiscal year 2012 was 42%, compared with 44% in the second quarter of fiscal year 2011. Before amortization of intangible assets and other items, the loss in the second quarter of fiscal year 2012 was $7.6 million, compared with income of $1.2 million in the second quarter of fiscal year 2011. Net and comprehensive loss applicable to shareholders in the second quarter was $2.2 million or ($0.06) per diluted share, compared with income of $1.2 million or $0.03 per diluted share in the second quarter of the prior fiscal year. The results reflect a reduction in the expected earn-out payment associated with the Axerra acquisition which, when combined with the reduction of the related intangibles, generated a net one-time gain of $6.2 million or $0.17 per diluted share at the net and comprehensive loss level.

"We continue to make progress in a number of promising opportunities with major mobile operators globally and we remain positive about our prospects," said DragonWave President and CEO Peter Allen.

Cash, cash equivalents, restricted cash, and short-term investments totaled $71.6 million, compared to $79.9 million at the end of the first quarter of fiscal year 2012, and $89.7 million at the end of the fourth quarter of fiscal year 2011.

DragonWave expects revenue for the third quarter of fiscal year 2012 to be in the range of $12 million to $15 million.

The DragonWave management team will discuss the results on a conference call and webcast beginning at 8:30 a.m. Eastern Time, tomorrow, October 6, 2011.

DragonWave® is a leading provider of high-capacity packet microwave solutions that drive next-generation IP networks. DragonWave's carrier-grade point-to-point packet microwave systems transmit broadband voice, video and data, enabling service providers, government agencies, enterprises and other organizations to meet their increasing bandwidth requirements rapidly and affordably. The principal application of DragonWave's

products is wireless network backhaul. Additional solutions include leased line replacement, last mile fiber extension and enterprise networks. DragonWave's corporate headquarters is located in Ottawa, Ontario, with sales locations in Europe, Asia, the Middle East and North America. For more information, visit http://www.dragonwaveinc.com.

Certain statements in this release, including the estimate of the revenue range for the third quarter of fiscal year 2012 provided above, constitute forward-looking statements or forward-looking information within the meaning of applicable securities laws. These statements are subject to certain assumptions, risks and uncertainties. Material factors and assumptions used to develop such estimates include DragonWave's expectations regarding: the network deployment plans of its existing and new customers, and the volume and timing of orders, shipments and revenue recognition. Readers are cautioned not to place undue reliance on such statements. These statements are provided to assist external stakeholders in understanding DragonWave's expectations as of the date of this release and may not be appropriate for other purposes. Actual results, performance, achievements or developments of DragonWave may differ materially from the results, performance, achievements or developments expressed or implied by such statements. Risk factors that may cause the actual results, performance, achievements or developments of DragonWave to differ materially from the results, performance, achievements or developments expressed or implied by such statements can be found in DragonWave's Annual Information Form dated May 4, 2011 and other public documents filed by DragonWave with Canadian and United States securities regulatory authorities, which are available at www.sedar.com and www.sec.gov, respectively, and include the following:

DragonWave assumes no obligation to update or revise any forward-looking statements or forward-looking information, whether because of new information, future events or otherwise, except as expressly required by law.

CONSOLIDATED BALANCE SHEETS
Expressed in US $000's except share and per share amounts
(unaudited)



ASSETS
Current Assets
	Cash and cash equivalents	62,182		77,819
	Restricted cash	219		714
	Short term investments	9,194		11,181
	Trade receivables	10,614		11,579
	Inventory	31,532		28,204
	Other current assets	5,226		5,306
	Deferred income tax asset	524		553

		119,491		135,356
Long Term Assets
	Property and equipment	6,555		7,560
	Deferred income tax asset	2,167		808
	Intangible assets	5,808		14,929
	Goodwill	11,927		11,927

		26,457		35,224
Total Assets		145,948		170,580

LIABILITIES
Current Liabilities
	Accounts payable and accrued liabilities	15,034		15,967
	Deferred revenue	1,541		1,453
	Contingent royalty	301		622
	Contingent consideration	3,773		14,622

		20,649		32,664
Long Term Liabilities
	Contingent royalty	1,449		3,290
	Other long term liabilities	1,491		1,999

		2,940		5,289
COMMITMENTS
Shareholders' equity
	Capital stock	172,037		171,570
	Contributed surplus	3,593		2,642
	Deficit	(44,063	)	(31,967	)
	Accumulated other comprehensive loss (AOCL)	(9,636	)	(9,618	)

Total shareholder's equity		121,931		132,627
	Non-controlling interests	428		—

Total Equity		122,359		132,627
Total Liabilities and Equity		145,948		170,580

Shares issued & outstanding		35,530,757		35,421,893

CONSOLIDATED STATEMENTS OF OPERATIONS
AND COMPREHENSIVE INCOME (LOSS)
Expressed in US $000's except share and per share amounts
(unaudited)

		Three months ended August 31						Six months ended August 31

		2011			2010			2011			2010
REVENUE			13,627			27,171			24,676			75,897
	Cost of sales		7,852			15,219			14,257			42,714

	Gross profit		5,775			11,952			10,419			33,183

EXPENSES
	Research and development		6,365			3,668			12,962			8,299
	Selling and marketing		3,849			4,460			7,929			8,589
	General and administrative		3,457			2,585			7,089			5,145
	Government assistance		(287	)		—			(637	)		—

			13,384			10,713			27,343			22,033

Income (loss) before amortization of intangible assets and other items			(7,609	)		1,239			(16,924	)		11,150
	Amortization of intangible assets		(622	)		(87	)		(1,209	)		(169	)
	Accretion expense		(276	)		—			(552	)		—
	Interest income		127			76			211			108
	Investment gain (loss)		(19	)		62			20			13
	Impairment of intangible assets		(8,315	)		—			(8,315	)		—
	Gain on change in estimate of contingent liabilities		13,161			—			13,161			—
	Foreign exchange gain		(36	)		69			84			186

Income (loss) before income taxes			(3,589	)		1,359			(13,524	)		11,288
	Income tax expense (recovery)		(1,310	)		126			(1,301	)		357

Net Income (loss)			(2,279	)		1,233			(12,223	)		10,931
	Net Loss Attributable to Non-Controlling Interest		73			—			127			—

Net Income (Loss) applicable to shareholders			(2,206	)		1,233			(12,096	)		10,931
	Foreign currency translation differences for foreign operations		13			—			18			—

Net and Comprehensive Income (Loss) applicable to shareholders			(2,219	)		1,233			(12,114	)		10,931
Income (loss) per share
	Basic		(0.06	)		0.03			(0.34	)		0.30
	Diluted		(0.06	)		0.03			(0.34	)		0.30
Weighted Average Shares Outstanding
	Basic		35,494,976			35,978,213			35,462,012			36,447,553
	Diluted		35,494,976			36,690,926			35,462,012			37,345,767

		Three months ended August 31						Six months ended August 31

		2011			2010			2011			2010
Operating Activities
Net Income (Loss)			(2,279	)		1,233			(12,223	)		10,931
Items not affecting cash
	Amortization of property and equipment		845			709			1,674			1,340
	Amortization of intangible assets		622			87			1,209			169
	Accretion expense		276			—			552			—
	Non cash royalty amortization		(201	)		—			(402	)		—
	Impairment of intangible asstes		8,315			—			8,315			—
	Gain on change in estimate of contingent liabilities		(13,161	)		—			(13,161	)		—
	Stock-based compensation		582			328			1,074			615
	Unrealized foreign exchange loss		72			174			73			190
	Non cash future income tax recovery		(1,310	)		—			(1,301	)		—
	Inventory impairment		104			707			161			650
	Unrealized gain on short term investments		(25	)		(65	)		(64	)		(16	)
	Accrued interest on short term investments		(1	)		(33	)		(2	)		(40	)

			(6,161	)		3,140			(14,095	)		13,839
Changes in non-cash working capital items			(2,046	)		(10,290	)		(3,330	)		(15,324	)

			(8,207	)		(7,150	)		(17,425	)		(1,485	)

Investing Activities
	Acquisition of property and equipment		(220	)		(656	)		(669	)		(2,806	)
	Acquisition of intangible assets		(89	)		(261	)		(403	)		(336	)
	Purchase of short term investments		—			(69,917	)		(22,432	)		(115,225	)
	Maturity of short term investments		6,977			60,725			24,485			68,799

			6,668			(10,109	)		981			(49,568	)

Financing Activities
	Share repurchase		—			(9,269	)		—			(10,323	)
	Equity contribution by non-controlling interest in DW-HFCL		—			—			555			—
	Issuance of common shares net of issuance costs		166			64			344			211

			166			(9,205	)		899			(10,112	)

Effect of foreign exchange on cash and cash equivalents			(86	)		(174	)		(92	)		(190	)
Net decrease in cash and cash equivalents			(1,459	)		(26,638	)		(15,637	)		(61,355	)
Cash and cash equivalents at beginning of period			63,641			70,559			77,819			105,276

Cash and cash equivalents at end of period			62,182			43,921			62,182			43,921

Cash paid during the period for interest			—			—			—			—


Investor Contact:		Media Contact:
John Lawlor VP, Investor Relations DragonWave Inc. jlawlor@dragonwaveinc.com Tel: 613-599-9991 ext 2252		Nadine Kittle Marketing Communications DragonWave Inc. nkittle@dragonwaveinc.com Tel: 613-599-9991 ext 2262